Economics of the 1920's
The 1920's was a time when the U.S. saw unprecidented economic growth. The role of government in a capitalistic, market driven economy is still debated today. What role should the U.S. government have had in the 1920s?
Talking points: What role should the gov't have on these four talking points in the decade of the 1920?
1. Should business and farms have limits on products and produce?
2. Should business people be allowed to make billions at the expense of cheap labor?
3. Should a country have unregulated trade with the U.S.?
4. Should credit be easy for businesses, farmers, investors, and homeowners to borrow money?
Keep gov't out of economy
Side Score: 6
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Gov' should regulate economy
Side Score: 8
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3
points
I don't think there can be any argument that when Governments mishandle the economy the results are disastrous, but in order to prove that Government should never intervene with the markets you must demonstrate that regulation is always to the detriment of the economy - and this is something I don't think can be done. With regards to the New Deal (which you accuse of prolonging the Depression) it was only when Roosevelt relaxed Federal intervention under pressure from the Supreme Court in July/June 1938 that unemployment began to rise again; until then unemployment had been falling and the standard of living rising. This is clear evidence that government regulation can serve to strengthen an economy - without the CCC, WPA, PWA, TVA etc... many more people would have been scavenging on rubbish heaps for food and queuing for the dole. Side: Gov' should regulate economy
1
point
1
point
A government has democratic legitimacy and can be held accountable for their failures at an election, whereas the business owners who would have free reign in an unregulated economy have almost no accountability and certainly do not represent your interests. Therefore, a government is a massively preferable manager. Side: Gov' should regulate economy
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The most compelling case for government regulation was given by Marx, who demonstrated that capitalism is self destructive and invariably leads to crises. In the simplest possible terms: 1. Few workers = high wages = low profits = bust 2. Many workers = low wages = low spending = low profits = bust. The Government therefore has to step in to balance the number of workers and their wages to avoid disaster. A communist state achieves this by providing the necessary number of workers to the business (thereby ensuring there can never be "too few") and setting their wages (thereby ensuring wage costs are kept low enough to enable profit, but high enough to encourage spending). State businesses can also be set up (obviously not just in a communist state) to provide work for the surplus of workers (thereby ensuring there are never "too many"). To focus on the areas outlined in the introduction: 1. Businesses and farms should have limits on production. Overproduction was a major long term weakness in the 1920s US economy which drove crop prices down and resulted in unprecedented rural poverty. If companies had planned production cooperatively (through a governing body... a.k.a. a government) then this could have been avoided. 2. For obvious reasons shown above, businessmen cannot sustainably exploit the workers because, in reducing the workers' spending power through low wages, they are depleting their market and sewing the seeds of their own bankruptcy (basic Keynesian economics). 3. It is important to note that Marx envisaged a "global communist community" which would include planned trade between countries - there would be no need for import tariffs. However, in the absence of such a community I would argue that tariffs are necessary to protect local businesses and reduce the incentive to outsource labour. Local businesses protected in this way are more likely to provide higher wages, and so keep more money circulating in the local economy - the Keynesian cycle continues. 4. The availability of credit should be kept balanced. The Wall St Crash and the 2008 financial crisis both arose largely in part due to credit. Enough credit should be available to encourage spending, but not to the extent that it cannot be paid back. In order to maintain this balance, governments need to strictly regulate banks (nationalising them seems a sensible option to me). Side: Gov' should regulate economy
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